Political agents get subpoenas in NY pension probe

NEW YORK 
Investigators probing the role that lobbyists known as "placement agents" played in arranging state pension fund investments have subpoenaed a number of politically connected New Yorkers who quietly picked up big paychecks for doing such work.

State officials on Wednesday released a list of dozens of agents who received hefty payouts in recent years for acting as middlemen between investment firms and pension fund officials.

Among the businesses listed was a firm run by former New York state Comptroller H. Carl McCall, who oversaw the state's $150 billion pension fund before a failed run for governor in 2002.

Other placement agencies that made the list were run by a former deputy mayor, a former city council president and the president of the Intrepid Sea, Air and Space Museum in Manhattan.

There is nothing illegal, per se, about investment firms paying well-connected people to help sell deals to pension fund officials, but Attorney General Andrew Cuomo and the Securities Exchange Commission have charged that some of those arrangements amounted to illegal kickbacks.

Two aides to former state Comptroller Alan Hevesi already face criminal charges in the case, along with two investment executives and the former boss of New York's defunct Labor Party.

The investigation has since spread to other states. Some of the nation's biggest and most influential private equity firms have been accused of either facilitating or turning a blind eye to the scheme, including a group run by White House auto industry adviser Steven Rattner.

Cuomo's office has also said it is sending subpoenas to scores of people who appear to have worked as placement agents without registering with the Financial Industry Regulatory Authority.

One of those firms that failed to register was McCall's firm Convent Capital, which was listed as the placement agent on a pension fund deal with Steinburg Asset Management. The deal with Steinburg apparently took place after McCall left office. He did not return a phone message Wednesday.

One of the richer payouts to any placement agent on the list was a $2 million payment made to a business entity affiliated with Bill White, the Intrepid museum president. Bill White & Associates was listed as getting the fee in connection with a major pension fund investment in City Investment Fund LP, a real estate firm.

White said in a message relayed by his publicist that it would be inappropriate for him to comment while the investigation is ongoing.

Other businesses listed as getting placement agent fees were affiliated with former New York City Council President Andrew Stein; Peter Powers, a deputy mayor of New York City in the administration of Rudy Giuliani; and Kevin McCabe, who was a chief of staff to a New York City Council speaker.

A firm called CQ Consulting, which was not registered with FINA, was also listed as receiving a payment. Previous news reports have indicated that the firm filed a document with the comptroller's office listing Susan Holloway Torricelli, the ex-wife of former U.S. Sen. Robert Torricelli, as one of its agents.

Current New York state Comptroller Thomas DiNapoli released the partial list of placement agents who did business with the pension fund during Hevesi's tenure on the same day that he filed a lawsuit against one of the companies accused of paying illegal kickbacks.

Saul Meyer, the managing partner of Dallas-based Aldus Equity Partners, was charged last month with helping his firm get a $175 million investment from the state pension fund by paying $300,000 to Hevesi political aide Hank Morris, who has since been indicted.

A spokesman for the company did not immediately return a message about the lawsuit. The company has previously said it did nothing wrong.

The lawsuit demands that Aldus return millions of dollars in investment management fees and restore all the pension fund's investment dollars.